Tuesday, August 24, 2010

The big government pediatrician now in charge of Medicare

Berwick avoided senate scrutiny

President Obama used the recess appointment process to appoint Dr. Donald Berwick to head up our government health care systems – Medicare and Medicaid. Presidents in the past have used this constitutional provision. Usually, it is used when the president wants to get his first choice appointed and knows he faces a hostile senate, a senate that would reject the appointment.

The constitution allows recess appointments when Congress is not available to consider giving its consent. In this case, however, it is apparent that President Obama did not want Berwick to face public scrutiny.

Berwick, a pediatrician had a short clinical resume. As a kids’ doc, he has probably never had to deal with the Medicare mess that he now leads. Chances are that he has had at least limited experience with the low reimbursements Medicaid pays to doctors.

Berwick is outspoken and controversial. His more infamous quotes have flown across the newswires and the Internet. Berwick’s praise of England’s National Health Service is particularly troublesome. While he does not favor the NHS’ long wait lines for critical health services and elective surgeries, he like the NHS and “value-based” medicine.

Imagine a hostile U.S. Senator asking, “So Dr. Berwick, are you saying that perhaps here in the United States we should withhold care from a senior citizen if Medicare thinks it is too expensive? If the person would probably die within a short time anyway?”

Pres. Obama knew better not to lay Berwick, the controversial quote-maker, open to that kind of questioning.

My favorite Berwickian quote:

For the past several weeks, I have been using one particular Berwick quote, because I think it sums up the Obama administration’s view of health care management. “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do.” [Emphasis Added]

Berwick here lays bare his bias: Mortals cannot manage their own health care. Only leaders have enough savvy to tell we commoners how to care for ourselves. Government, he implies, is the proper authority to control medical caregivers. The quote speaks volumes about Berwick’s attitude toward Health Savings Accounts (HSA) and consumer-directed health care. It appears that in his view, mere mortals could not possibly make health care consumerism work. Yet, consumerism is the one shining star in pre-Obama health care reform that has both reduced spending trends, and helped individuals maintain good health.

Berwick prefers that health “experts” along with academics, researchers, and government leaders lay out what is medically preferable. President Obama appointed him, ergo, Obama believes government is the best arbitrator of individual health care.

At the same time, however, there is a remnant of truth in this Berwick quote. Health care is complicated and difficult for individuals to manage. The complexity of health insurance and the provision of medical care is why Americans seeking advice consult with non-government, private experts rather than government bureaucrats.

Doctors, nurses, pharmacists, therapists, patient advocates, professional insurance agents, insurance company claims specialists, social workers, and a host of other highly trained individuals help health care consumers navigate through medical complexity – with bureaucrats on the sideline.

Berwick implies that the army of private professionals already assisting individuals is not capable of doing what government “leaders” do. Government, Berwick implies, is providing the leadership that we demand, and without which we would certainly waste our health and money. We “need” government as our shepherd as we ponder the health care we think we need. Do not be dismayed, however, because our new health care leaders will make we get the care when they believe we need it, and in the manner they prescribe. “That’s what leaders do.”

Imagine Dr. Berwick trying to explain this to a U.S. Senate panel.

Saturday, July 24, 2010

Individual insurance across state lines. Some thoughts to ponder.

In a truly free market for health insurance, crossing state lines to purchase the best possible insurance product makes a lot of sense. That’s why so many smart, well-studied conservatives support it.

Competition is the key to holding down prices.

But I caution you on this, and not because I oppose it, but because there are serious downsides that must be addressed. Let me mention three:

First. The issue of individual state mandates, and how that translates into better pricing. Minnesota ranks second in the country with insurance mandates – 67 of them (RI is first at 70).

If you purchase an Iowa insurance product that might only have 55 mandates (I do not have the real number in front of me), which state’s mandates will prevail? If Minnesota’s, then a good deal of the competitive nature of the plan is gone. If Iowa, it begs the question of how will Minnesotans get their fertility treatments paid (for instance).

Or, a regional pact can be negotiated that allows at least limited competition within the region, with identical mandates (whose will prevail, and would Linda Berglin or Tom Huntley allow this?).

Second. The issue of networks. As you doctors painfully know, the insurance companies can play hardball on network negotiations in part because there are so few competing in Minnesota. On the other hand, doctors are loathe to sign contracts with more networks. How will non-Minnesota insurance companies overcome the inability to create workable networks?

Networks can be rented, of course, but what advantage would one company have over another? If all have the same mandates, and all, but a few have the same networks and contracts, I fail to see the advantage.

Third. Many who favor cross state lines sales do so because they do not support employer-based health insurance. The assumption is that individuals will be better able to shop for their own plan if freed up to do so, in a market of many plan choices.

Setting aside the issue of the individual mandate, and if we can overcome the issue of state mandates and networks to design competitive products, there are still serious considerations in unraveling the employer-based insurance system.

Today, depending on whose numbers one uses, some 140-150 million Americans receive private health insurance through employers (more than the entire Russian population, by the way). If our goal is to achieve near universal coverage, this gets us halfway there.

Let us assume that Congress eliminates the tax deduction for employers to provide health insurance. And let us assume that in so doing, Congress transfers that deductibility to individuals. Would 150 million Americans continue to receive their insurance from private markets?

The presumption is that employers would simply pay their workers the difference. That is, instead of spending $12,000 on insurance, they would spend $12,000 on payroll. The tax implications for the employer are nearly neutral, save for the extra payroll taxes generated by increased wages and salaries. An option would be paying an additional $10,000 and consider the payroll taxes part of the total compensation, but again, these are business expenses that will be allowable as deductions, and not subject to taxation.

Will the outcome, then, be increased pressure on tax revenues from the neutrality of the employer tax deductibility, and the increased deductibility of insurance premiums? If so, what will Congress tax to replace this lost revenue?

More of a concern than transferring insurance cost to wage cost is the most simple of questions: Without an employer mandate, why do we believe employers would pay the insurance savings in increased wages? This is a dangerous assumption that could leave individuals with reduced net income, and leave more on the bottom line for employers. Unfortunately, those now-liberated employees might also forgo health insurance because of the negative impact of employers not transferring those costs – unless Congress forces them to do it (and that raises numerous other issues). Hence the uninsured rate could spike higher, driving us closer to single payer or some other such scheme.

I would suggest there are other considerations, but will not dwell on them here. They do, however, include the right of employers to control their own businesses, the need for employers to retain and attract good employees, and other such issues.

Lastly, let me repeat. I am not for or against the idea of purchasing individual health insurance across state lines, but I believe these serious issues need to be fully vetted before this idea can win wide spread support.

Friday, April 9, 2010

CNN interviews whiners about health care reform

Today, someone sent me to a CNN webpage that reported on four individuals -- Karen Scheuerman, Mary Pitman, Douglas Wolk, and Lita Epstein -- that are pleased as pink about Obamacare. Go and look for yourself and then come back to this blog, because I am going ask the questions below that CNN, apparently, failed to ask.

Go here: http://money.cnn.com/galleries/2010/news/1004/gallery.health_care_real_people/index.html

For Karen Scheuerman – How much money have you saved because you pay premium for a $10,000 plan, versus first dollar coverage? It certainly should be enough to pay for necessary preventive services. What preventive services are you unable to afford, given how much you are saving?

Do you sincerely believe that a health insurance plan offered through a Health Insurance Exchange will save you money? Based on what data? And those subsidies you expect to receive, are they free? I mean, does someone else have to pay them so you can pay less? I note that you are in some kind of financial advisory business. Will you be advising your clients that getting on the dole is a wise strategy?

Mary Pitman – I see that you are willing to pay for preventive care, but not for catastrophic coverage. What part of “insurance” do you fail to understand? Insurance is all about getting help for unexpected occurances, not preventive care (well, in a normal insurance market, anyways).

And you suggest the ER is the only choice for uninsured people? Are you sure, or does your town lack Community Health Centers?

Apparently you believe picking pockets is okay, as long as it is someone else’s pocket you pick. Do I have that right?

Why do you care, by the way, that people (prior to Obamacare) with health insurance have to pay more, since you are not presently insured?

You suggest that everybody will get cheaper health care. That is an interesting theory, but I expect you will be very disappointed as health care cost continues to rise faster than CPI.

Lastly, I see that you are a healthy person, and you understand that getting healthy people into the pool is important. Why, then, haven't you jumped into the pool yet? Or are you just waiting until someone else helps to pay your premium?

Douglas Wolk – Let’s see. You are young and healthy, and apparently, you only need flu shots (I would ask you who told you that, but it would take me off course). If you only need flu shots and help for an occasional snotty nose, that might even work in one of those foreign countries (as long as you can find a family doctor willing to take your case).

Imagine, you have to pay a whopping $500 a month to insure three people. How much do you think is fair? Then I see that you prefer not to abide by the insurance contract you willingly signed that tells you up front not everything you want is covered. Let me ask you this: When you go to a restaurant and pay the menu price of a hamburger, do you get angry if the owner denies you prime rib?

About that single payer thing: As a writer you need to do more research. And are you really anxious to live in a country where the government could employ “mechanisms” to keep costs down? I wonder how that would work?

Lita Epstein – You are 57 and self-employed. Your $700 a month insurance increased to $1,200 at age 56. I am 62, self-employed, and the insurance my wife and I own just increased to $689 a month. What gives? Aha. You probably have richer coverage than I do, instead of the common sense insurance that I own.

I see you have a health plan of sorts. Looks to me like a plan that costs you more than you will ever actually spend on health care, since it is virtually useless for any catastrophic procedures.

You Four: Listen up now. Aren’t you glad that in the United States there are filthy rich people, people that make more than $200,000 year – really filthy rich – who are willing to give you some of their money? What a country.

Saturday, March 27, 2010

Cars are not people - Welcome to finite value

Auto Insurance Mandate is a False Argument
Humans are not autos

You’ve likely heard it. “If the government can mandate auto insurance, then why do you say it cannot mandate health insurance?”

There are at least four major differences (and be sure to read number 4, because it is the most critical):

First: The FEDERAL government does not mandate auto insurance. States mandate it. And three states have chosen not to do so. Auto insurance, like health insurance, is a state issue.

Second: The mandate for ownership of auto insurance only covers what the driver might do to someone else. It is liability insurance, not collision, comprehensive, glass, or preventive maintenance. To be like the new FEDERAL health insurance law, auto insurance would have to cover routine maintenance, parts replacements, and just about everything else.

Third: Even though 47 states mandate auto insurance coverage, the average uninsured rate, according to the Congressional Budget Office, is 14.6 percent. (Actually, I believe that estimate is very low, considering that in California and Texas, it exceeds 25 percent.) The uninsured rate in our mostly voluntary health insurance system has held steady at about 15.5 percent or so for a decade.

Four: Auto collision insurance is somewhat like catastrophic health insurance in that it will pay to fix damage from an accident. But it never pays more than the value of the car (there is no limitless benefit).

If an 85-year old man wraps his $3,500 car around a tree, and the car suffers $4,000 in damages, the insurance company pays the old guy $3,500. The auto has a finite value.

If that 85-year old man breaks his bones, and if health insurance worked like auto insurance, the insurance company would give the man three choices: 1) the fair market value of his life in cash, 2) enough money to pay for hospice care until he dies, or 3) pay for assisted suicide.

In the United Kingdom, the value of human life is determined by a formula. For the most ill patients and the elderly, health care regulators decide the value of human life in Quality Adjusted Life Years. If there is not enough economic value in the “repair” of a human life, plans are made to help them adjust to death. In the United States, Oregon demonstrated this principle with 64-year old Barbara Wagner.

Wagner contracted cancer. She wanted to continue to live, and indeed, if she lived in any state other than Oregon, the health system would have given her that chance. Wagner’s doctor prescribed Tarceva, a new chemotherapy drug regimen. Wagner, however, received her health coverage from the Oregon Health Plan – a government health plan. Because of its global budget, Oregon officials notified Wagner that they would not pay for her chemotherapy, but they would pay for either hospice care or an assisted suicide.

Dr. Walter Shaffer, a spokesman for Oregon’s Division of Medical Assistance Programs, explained the realities of the Oregon Health Plan. “We can’t cover everything for everyone. Taxpayer dollars are limited for publicly funded programs. We try to come up with policies that provide the most good for the most people.” Oregon’s health care managers decide, in the end, who will gain relief from pain and suffering, and who will die.

Despite strong bipartisan opposition, President Obama signed the “Patient Protection and Affordability Act” on March 23, 2010. The bill authorizes federal government approved health plans, and will help 68 percent of Americans to receive some form of federal tax subsidy to purchase overly expensive health insurance. Accepting a government subsidy means they will be governed by federal health plan guidelines. Barbara Wagner, were she alive, would tell you what this means.

Health insurance is not auto insurance: So you get the picture. Auto insurance deals with predictable, finite cost. It is a state issue, not a federal issue. And when the cost of the insured item exceeds its finite value, it is cashed out. Why would auto insurance companies cap payments at the value of the auto, and not offer limitless coverage, preventive care, reimbursements for worn out engines and transmissions? Because no one could afford it.

With the stroke of his pen, President Obama has invited you into the world of finite human value.

Thursday, December 17, 2009

Health reform’s hidden costs - Placing states and citizens at a huge risk - Attacking the American Spirit

Governors across the country have begun screaming at Congress, “Hold on a minute. Time out on this health care reform thing.”

Truth has begun to set in, that as a result of federal health care reform, every state faces a plethora of unfunded mandates that will drown them in dilemmas and red ink. Once it passes (or, if) the hidden costs of federal health reform will immediately become clearer. As a result, states and local governments will increasingly find it impossible to fund their most vital services – education, police, fire, water, energy, roads and bridges.

Governors have warned for years that the cost of Medicaid threatens their state budgets. They had hoped Congress would fix the problem, not exacerbate it. Congress, instead, has been showing it is deaf to governors and to citizens.

But the increased billions to be spent on Medicaid is just the tip of the iceberg.

This is a partial list of the increased cost and loss of state revenue faced by states, and their residents. I am certain you can add many thoughts to these.

1. By raising Medicaid eligibility to 133 percent of the Federal Poverty Level, millions more Americans will qualify for the program. The federal government will pay this cost for a period of time, but eventually, states will be forced to spend more on Medicaid, not less. Nebraska Gov. Dave Heineman says this will cost his state $2.5 billion. Other governors are making the same case.

2. Every current state-level health care and insurance statute, rule, and regulation will have to undergo scrutiny to ensure it complies with new federal law. When changes are required, they will be subject to statutorily-required bureaucratic and legislative review at a cost that the best economists could never predict. This effort will take bureaucrats away from their assigned tasks, meaning current programs will suffer; or states will hire more bureaucrats to fulfill their mission.

3. While everything is under review and being rewritten, state programs will be in limbo. Federal law will require states to conform to new mandates for which there will be no guidelines. States will spin their bureaucratic wheels while trying to conform to vapor regulations, and face the potential of lost federal revenue for non-compliance.

4. Today, even before adding millions more to the Medicaid roles, 40 percent of practicing physicians refuse to accept Medicaid patients. This results from low Medicaid reimbursements (and yet, even at this, Medicaid bleeds money from states’ Medicaid program cost). So much for access to health care. States will be forced to step in, but no one knows how or the cost of solving this unintended result.

5. Attorneys, accountants, and benefit consultants will make a fortune as they advise employers on the overwhelming changes – and penalties – associated with new federal law. Employers will be forced to divert funds to compliance, even if they choose to drop the health insurance benefit. (Depending on which version of reform that might pass, employers could be faced with new mandated insurance benefit costs.) Productive capital, that otherwise would be invested in expansion and increased employment, would be spent on compliance. This will cost state and federal treasuries billions of dollars in lost tax revenue.

6. Individuals, faced with the mandate to purchase insurance, will be forced to divert income from self-initiated purchases to insurance premiums. The reduction in purchasing power will further depress the moribund economy, and ripple out to the economy’s edges. Some experts predict that individual health insurance premium cost will double in the next 10 years as a result of federal reform. That money must be diverted from other spending, savings, or debt reduction.

7. States would lose tax revenue, as the increased cost of health care would reduce business profits and individual net income. Sales and income tax revenues would plunge, as more money is diverted to federally-mandated health insurance cost.

8. The cost of apprehending and prosecuting violators of the insurance mandate would add billions to the IRS’ enforcement budget, as well as expanding the cost of federal law enforcement and federal courts. This will rob necessary programs of their revenues, and will drive taxes upward. Every dollar spent on taxes will be diverted from the productive economy.

Perhaps the most serious unknown cost of federal health care oversight is the loss of what we used to call the American Spirit. This is the idea that individuals are free to pursue their own destinies, with government kept as far-removed from daily lives as possible. The American Spirit celebrates life, rather than regulates it. The American Spirit is a spirit of individualism and even nonconformance, not communalism and compliance.

The hidden costs of federal health care reform are incalculable, not too mention incomprehensible. This is a bad idea that grows worse each day. Now that leftwing activists are realizing it, too, it’s time for a pause…a long pause.

Monday, November 9, 2009

The 220-215 Health Reform Vote - What's Next?

Everyone will have an opinion about the November 7 vote in the US House. Mine looks ahead to the remaining hurdles. Take heart. This is a long way from finished.

Senate and Conference Committee

HR 3962, passed by an embarrassingly slim five-vote margin, now moves to the U.S. Senate. Many national talking heads and elected officials are saying it is already dead there. We shall see. Frankly, I never believed the Democrats could pass it out of the House, given the rancor over abortion, immigration, resistance from seniors and the like.

The AARP may have sacrificed its future by backing this bill. The same is true of the American Medical Association. These groups are facing incredible hostility from their own members.

Let’s assume, however, that the Senate actually passes a bill. Its version, and that of the House, must be identical in every aspect. This includes the words, the provisions, the organization, even the punctuation. Given the mood of the Senate, if they pass anything, it will be significantly different from the House version.

If the Senate passes a bill, it will be sent to a conference committee. The conference committee includes members of the House and Senate. If the conference committee can somehow pass a bill out, it still faces immense opposition.

The conference committee reconciled bill is sent back to the House and Senate for consideration. Imagine if the conference committee bill retains abortion coverage. Or does not contain the government option. Imagine that the employer mandate falls off the table in the conference report, or strong immigration verification language is added. Conference committees often report out bills that look very little like that which Congress had already passed.

The next step is a House and a Senate vote. No amendments are allowed. They must vote it up or down. Will Pelosi be able to hold onto 218 votes? Will Reid be able to get a conference bill passed?

Bottom line. You must redouble your pressure on the U.S. Senate. Your groups must come out swinging. Your neighbors, co-workers, and friends must be alerted. There is no time to waste.

This may seem self-serving, but now is the time to load up with FACTS: Not Fiction booklets, and give them to everyone you know. Here’s the link: http://tinyurl.com/yex2eab

Never, never, ever give up.

Wednesday, August 12, 2009

Demonizing insurance companies

President Obama and Congress changed their strategy in the last several days. They no longer campaign for health care reform, it is now health insurance reform. (Sidebar: Obama rightfully rails at the out of control cost of Medicare and Medicaid as threats to the national economy, but sees as his priority, reforming the private health insurance market. Strange logic.)

Health insurance policies are contracts. Contracts are supposed to be enforced by governments.

Health insurance policies are, to my understanding, filed with and approved by government agencies.

Health insurance policies are subject to the political gamesmanship of state legislatures and are, therefore, politically-negotiated and approved contracts.

Health insurance companies must collect enough premium to pay the bills of those with whom it contracts (people who own the insurance policies) and the physicians, hospitals, and other providers whose services are used by those people who own insurance contracts. If they do not collect enough premium, they will go out of business. Yes, they must also cover their administrative expenses, but only at levels allowed by the laws passed by elected officials.

Health insurance is held hostage to some extent by economic forces, of course, but within the constraints allowed by the political process (in the case of health insurance, usually driven by ideological populism and the cancerous desire to be re-elected rather than pass good laws).

Since health insurance is, by this logic, already controlled by the political process, and since our tax dollars already support in part or whole, health care services for 103 million people, plus government employees, why has Obama and Congress made the insurance companies public enemy number one? I believe they should admit they have met the enemy, and the enemy stares them in the face each morning.

A health care system driven by politics, rather than economics and individual moral responsibility, will always need demons – and the insurance companies are catching it.

Governments should establish the basis of an enforceable contract, and then enforce them, not demonize them.